Square scoops up Afterpay in the battle of BNPL

Square agreed to purchase Australian fintech giant Afterpay for $29B, adding another big player to the “buy now, pay later” space.

“Buy now, pay later” (BNPL) — which at one point seemed to be reserved for Pelotons — has officially reached the masses.

Square scoops up Afterpay in the battle of BNPL

The most recent news?

Jack Dorsey’s Square has agreed to purchase Afterpay, an Australian BNPL leader, for $29B.

The model lets consumers break big purchases into smaller payments, often without interest

Usage has exploded during the pandemic:

  • 60% of consumers say they have used BNPL
  • 51% have used it during the pandemic
  • 215% increase in YoY usage in January and February

The spike in usage has been matched by a flurry of activity in the space, including:

  • Affirm’s IPO in January
  • Klarna’s acquisitions of Hero and APPRL (and fundraising from A$AP Rocky)

Unsurprisingly, competition is heating up

In a recent tweet, 2PM’s Web Smith shared a timeline of Affirm’s US market share, highlighting just how crowded the space has become:

  • Q4 2018: 78%
  • Q1 2021: 16%

And it’s about to get even hotter

Last month, Apple announced that it’s working on a BNPL product of its own.

Looking at the price tag, some analysts are wondering why Square didn’t do the same when they’ve shown the ability to build products in-house (e.g., Cash App, a merchant Point-of-sale (POS) system, etc.).

Regardless, we agree with this take that it only makes sense for the acquisition to be paid out in 4 equal installments.

Topics: Financial Tech

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